Hunt for Office Buildings

New Pres. Park to go all-out to boost earnings of National Pension Service

The National Pension Service(NPS) has been buying buildings in key locations in Seoul in a move to diversify its investment. The pension fund bought the KB Yeoksam Building for 700 billion won earlier in the year and is about to purchase another building, Samwha Building in the plush Teheran-ro in southern Seoul where many office buildings are located for 250 billion won, according to reports.
The NPS's subsidiary, Kokrap NPS, is to purchase the building from Samwha Integrated Development Co., which owns the building built in 1995 and is made of 20 floors above ground and 7 basement floors with a total floor space of 40,480 square meters.
The office building has a number of foreign companies as tenants including Oracle, Rockwell, and ING Life. The NPS started to invest in buildings in 2004 by buying the Dacom Building, followed by Seoul City Tower, Sigma Tower, Nawoe Building, and ING Center, among others, emerging as a big hand in the city's real estate market.
The NPS spend a total of 1 trillion won in buying buildings as of the end of last year.
The NPS has been doing a very good job of keeping local buildings from being turned over to foreign investors such as the Singapore Investment Authority, Deutsche Bank, and Morgan-Stanley, among others, who have been making a lot of money investing in real estate in the country.
Park Hae-choon, former president of Woori Bank, has been named to head the National Pension Service as president, which is regarded as a very good turn of the event for Park.
As he think back, he now understands that the government decided to relieve him from Woori Bank to give him a better job with a government-run organization based on his experience of working for key sectors of the financial industry, such as insurance, credit card and bank. The government thought that he could do a good job of making reforms at government-run or invested firms.
The NPS handles pension funds for the government and therefore is much more important than heading an insurance, credit card and a bank as lot of people depend on pension during their retirement. The government felt that the pension service should be reformed some how so that it can provide better services and better managed.
Asked how he would go about making reforms at the NPS, the president said when he took over the helm of Seoul Guarantee Insurance Co. in 1998, the company had some 20 trillion won of its guarantees in default and no one in his right mind would want to take over running the company in such a case. LG Card, on the other hand, had trouble launching its board of directors because it had problems finding outside directors. Park said he took care of the problems when he ran the two companies as the CEO and normalized the operations of those companies.
The new NPS CEO said he will oversee the management of funds at NPS, including investments to see where money is going. He feels he is qualified enough to handle investment of the funds after spending 34 years in the financial industry. He felt that the government thinks highly of a professional financial expert to run the NPS including its investment operations.
As the top official at the NPS, he said he should oversee where funds are being invested to make profits. The Ministry of Health, Welfare and Family in its recommendation of Park to head NPS noted that it hoped to boost income from the fund investment.
The NPS had assets of 232 trillion as of April, and it is projected to increase to 330 trillion won in 2010 and to 900 trillion won in 2020. Earnings from managing the assets came only to from 5.6 percent to 8.1 percent annually, far lower than the similar funds such as Calpers in foreign countries, not to mention retirement funds in the country such as those for government employees and military personnel.
Park, a graduate of Yonsei University, joined Samsung Fire and Marine Insurance Co. after graduation and worked way up to a director in charge of marketing before moving to Seoul Guarantee Insurance Co. as the CEO. nw

A view of NPS building in Seoul.

President Park Hae-choon of the National Pension Service.